[HN Gopher] The Long Shadow of Checks
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The Long Shadow of Checks
Author : zepton
Score : 56 points
Date : 2023-12-13 19:31 UTC (3 hours ago)
(HTM) web link (www.bitsaboutmoney.com)
(TXT) w3m dump (www.bitsaboutmoney.com)
| peter_l_downs wrote:
| > One control which we made for checks to reduce systemic risk
| continues to have consequences more than a century later. Most
| disagreements between you and a grocery store are beneath the
| notice of the law. If you and your grocery store have a
| disagreement about a check specifically, you can go to jail. The
| crime is sometimes called "uttering", for charming historical
| reasons.
|
| patio11: you write a lot, and have taught me a lot, and I
| appreciate it. But I want to make a small complaint. You
| frequently say things like "for charming historical reasons" and
| then _cite no sources_. Link something! Cite something! As a
| reader, I regularly feel like you are teasing me or showing off
| to me when you include all these small asides without any further
| reference or any concrete details.
| r2_pilot wrote:
| It's actually kind of boring in this case, per Wikipedia: "In
| law, uttering is synonymous with publication, and the
| distinction made between the common law offences was that
| forgery was the fabrication of a forged instrument (with the
| intent to defraud) and uttering was the publication of that
| instrument (with the intent to defraud)."
| peter_l_downs wrote:
| The distinction is a fact, but I haven't been able to find
| the _reason_ for the distinction, which I'm hoping is quite
| charming!
| otteromkram wrote:
| He doesn't always leave some footwork up to the reader.
|
| Take this passage, for example, where the term "Clearing" is
| expanded upon:
|
| > The UCC facilitated banks clearing each others' checks.
| ("Clearing" is a magic finance word. Clearing a check refers to
| completing the process which the check agrees to: the writer
| sees money leave their account and the person depositing the
| check sees it enter theirs. This is much more complicated than
| it sounds in this quick gloss.)
| spelunker wrote:
| Also, is there a particular reason he uses obscure words like
| "infelicity"? I'm a native English speaker and I think that is
| the first time I've heard that word used. Is it really that
| hard to just use "misfortune"?
| e63f67dd-065b wrote:
| I'm continually surprised by the political influence held by the
| thousands of tiny banks in the country. I must applaud the people
| behind the Check 21 Act: it's the combination of a neat backwards
| compatibility trick (if you want paper, we'll print it and send
| it to you) and political maneuvering that I must admire it.
|
| > Since the standard U.S. bank account is a checking account,
| even if it cannot write checks, it is necessarily a credit
| product.
|
| Why is this the case? Checking accounts without the ability to
| overdraft and thus create credit risk exist; I've always wondered
| why they're not more widespread. Is it a problem that people who
| are Chex blacklisted are unprofitable anyways?
| telotortium wrote:
| Even without the bank giving the check writer the privilege of
| overdrafting, either the bank or the check recipient has to
| absorb the loss if they accept a check for which the check
| writer has insufficient funds (unless the bank goes after the
| check writer). By contrast, with a debit card, the credit risk
| is much less (since the bank knows before the transaction
| whether sufficient funds are available).
| davidw wrote:
| > political influence held by the thousands of tiny banks in
| the country
|
| Car dealerships are pretty bad too.
| digging wrote:
| > I've always wondered why they're not more widespread
|
| Historically, it's a major source of revenue for banks[1]. I
| used to use BOA, when I switched to a local credit union they
| at least offered me the choice of "overdraft protection," which
| obviously I declined.
|
| Fortunately, overdraft fees appear to be growing less
| profitable[2], so hopefully banks will phase them out.
|
| [1] https://www.consumerfinance.gov/about-us/newsroom/cfpb-
| resea...
|
| [2] https://www.consumerfinance.gov/data-research/research-
| repor...
| otteromkram wrote:
| An alternative might be scaled NSF fees.
|
| Instead of one standard overdraft fee, smaller miscues might
| amount to a few bucks or something.
|
| Transactions in the hundreds or thousands could be
| proportionately larger.
|
| Maybe a "window" should be available for reversal of NSF fees
| if a balance is brought up to cover the credit amount.
|
| I can see the point of waiving the fee, but someone has to
| cover the cost of funds aren't available.
|
| Should the grocer have to eat the cost of goods you purchased?
| How about the bank?
|
| Arguably, no.
| stevenjgarner wrote:
| > "Clearing" is a magic finance word. Clearing a check refers to
| completing the process which the check agrees to: the writer sees
| money leave their account and the person depositing the check
| sees it enter theirs. This is much more complicated than it
| sounds in this quick gloss.
|
| Just because the writer of the check sees the funds of their
| check leave their account, this does not mean the recipient of
| the check has collected those funds. At any given moment, there
| is a considerable amount of money belonging either to check
| writers or recipients, not under their control yet being invested
| in overnight investments and repurchase agreements for the profit
| of the bank(s) involved. This becomes quite exaggerated when you
| think of the time zones involved and the fact that the resolution
| of the clearing houses is greater than or equal to 24 hours. So a
| check from an account in Puerto Rico to an account in Hawaii will
| take a minimum of 24 + 6 hours = 30 hours for the bank(s) to get
| a return on their customer funds. As the article points out, the
| "clearing" of funds to the recipient's account is an act of
| credit and not an act of money transfer.
| gosub100 wrote:
| For many years it was one of the entry-level jobs for pilots.
| "check runners" were essentially overnight couriers that would
| fly everywhere, even to rural areas, collect bags of checks and
| take them to major branches where they were cleared.
|
| I remember an article, probably from 20 years ago, warning
| people that the check infrastructure was about to change and
| people who were "floating" checks for 2-3 days (relying on this
| behavior) weren't going to be able to rely on it any more. I
| think that was when they went to electronic scanning _at the
| bank itself_.
| secabeen wrote:
| The compelling thing for me still with checks is that the banks
| take on nearly all the costs of processing them, and what costs
| are imposed on the customer are fixed, and do not scale with the
| amount of money being transferred. It's possible to do fixed-cost
| transfers using other systems (PayPal, Venmo, etc.) but it always
| feels like those transfers are only tolerated, and they really
| want to push you to their other offerings where they can get
| their vig.
| drsopp wrote:
| > the banks take on nearly all the costs of processing them
|
| Not for me. I live in Norway. I suddenly became an absent party
| of a class action lawsuit in the USA. The settlement came in
| the form of a check. A small amount, maybe around $50. But the
| cost of cashing it in Norway was more than the value!
| Scubabear68 wrote:
| This started out as a good narrative on the history of checks,
| but quickly devolved into a political rant about poor people
| being victims of banks, and no real criminals write bad checks.
|
| The first is true, but the second is not. Check fraud was a very
| big deal for years for criminals. I don't know if it is anymore
| given the progress in electronic payments.
| timdev2 wrote:
| I don't think that's a fair reading. At most, the piece
| describes a common political rant, and then says "Phrased that
| way, it sounds almost fantastically unjust. And... it's
| complicated."
|
| Your comment, in contrast, strikes me as being much closer to a
| reflexive political rant than the essay.
| Scubabear68 wrote:
| Actually my focus was less on poor people and more on the
| incorrect assumption in the article that true check fraud was
| non existent.
| reaperducer wrote:
| The longer you live, and the more things you do, the more you
| realize that checks are still alive and well. You still need
| checks for: Charitable donations - Many charities
| maximize every penny, and electronic contributions eat into that.
| Paying my accountant - Good accountants make every penny count,
| and aren't interested in tithing from their revenue to credit
| card companies. Tipping the paper boy
| Tipping the doorman (Though recently, I've switched to cash for
| this, as it looks better in a Christmas card) Business
| license renewal in certain cities Some of my recent
| real estate transactions have required checks to be written to
| various local authorities, county clerks, etc. Making
| IRS payments without a fee Paying the gas bill. My
| gas company charges $5+ to pay by credit or debit card.
| Paying the rent. My building's management company charges $20 +
| a percentage to pay by debit card, or $50 + a percentage to pay
| by credit card. If I pay my bill with a check, there's no
| surcharge. If I pay by credit card, I have to pay another $113.
| Paying the electric bill. The electric company charges $5+ to
| pay by credit or debit card. Passport renewal fee.
| Renewing a passport by mail in the United States *requires* a
| check or a money order.
| w3ll_w3ll_w3ll wrote:
| I don't undertand why there is not a better alternative in US,
| like a bank transfer/wire. In the EU, these transfers are often
| free at most banks, or at most, they incur a fee of 1 or 2
| euros.
| reaperducer wrote:
| I guess the opposite could also be asked: Why doesn't the EU
| use something proven, durable, redundant, and sensible like
| checks instead of relying on fragile computers that have
| thousands more points of failure?
| IshKebab wrote:
| Because cheques are unreliable, insecure, slow,
| inconvenient and expensive, and electronic bank transfers
| solve literally all of those issues. What kind of a stupid
| question is that?
|
| Do you think cheques are not processed by computers?
| gosub100 wrote:
| There is, Zelle works pretty well for smaller amounts. Paypal
| jinxed themselves early on by lobbying so hard to be "not-a-
| bank" (even though they do everything a bank does). If they
| hadn't used their not-a-bank status to screw so many people
| for so long (I think they're better now, not sure), they
| could have been the de-facto payment processor by now, at
| least for debit.
| WalterBright wrote:
| I pay for things with credit card if they don't tack on a fee
| for it. I pay with a check if they do.
| dqv wrote:
| It's interesting to see this discussion about speeding up check
| processing, because it seems that a lot of people use checks to
| _slow payments down_. It 's a convenient way to make it
| inconvenient for the receiving party!
|
| It works like this: receive invoice, wait until due date, write a
| check dated for the due date, wait a few days, send it through
| regular mail, and complain about the past due notices because
| "I've already sent the payment!! Did you lose it or something?"
| Applying late fees doesn't work either, they'll just send a late
| payment again without the late fee included.
|
| At first, I genuinely thought it was because they preferred
| checks for record keeping purposes, but when I set up echeck and
| told them how they just need to call us and give us the check
| number to pay. Or they can just enter their information at our
| payment processor's portal. Nope! It's "insecure" (Sir/Madam,
| you're sending me a piece of paper with your bank account and
| routing number and it's going through the mailing system where
| mail gets lost...). For that same reason, they don't want to pay
| with a card either.
|
| That's why the cost of paying the transaction fees for card
| processing is so worth it to me. I got the check scanner years
| before the COVID lockdowns to speed things up, but nothing beats
| the sometimes instant card settlement deposits. I still accept
| checks from responsible, timely payors, but stop doing business
| with anyone who has a pattern of paying late with checks. It's
| not worth the additional work to get them to pay (there's truly
| no way to know what their intent is - are their lateness
| predictable or is this the month they're going to wait 45 days to
| pay?). I'm fine with letting someone else wait for them to pay
| late.
|
| One thing that still seems to be missing from bank cards is the
| lack of ability to add your own identifier (namely the check
| number) to the transaction _at time of payment_. I understand
| that, for responsible payors, this is why they might prefer
| paying with checks - you not only get a reference number, a memo
| line, and a date that makes sense for your own internal system.
| Even with bank cards, the date of the transaction is sometimes
| not the date that it actually happened, which can be confusing
| for record association. Zelle has a memo entry, but the reference
| identifiers are letters and numbers, ew. An internal auto
| incrementing number to identify transactions would be really
| useful.
|
| Anyway, hopefully paper checks will be phased out. Although I do
| still find them useful for interbank account transfers - the
| Zelle multi-account trick still makes me kind of queasy.
| sneed_chucker wrote:
| Honestly, I just hate how insecure and legacy everything
| involving banking in this country is.
|
| For example, payroll - there's literally no reason your employer
| needs to store your account and routing number as another piece
| of your personal info that they can lose when some hacker finds
| out their MySQL admin password is "admin"
|
| Like, the system should be that you give your employer your banks
| name, plus a UUID associated with your account that allows
| entitys to deposit but not withdraw funds for you account. It
| would be trivial to implement and make things much more secure,
| but instead we're stuck with the account+routing number system
| that's basically paper checks but put on a computer.
| paulddraper wrote:
| And most utility/etc bills will require ACH (or a payment fee).
|
| So now Mountain Valley Energy Inc has the information to empty
| your account.
|
| ---
|
| (Though FWIW, probably neither your employer nor your utility
| company is storing the information themselves.)
| clintonb wrote:
| > It would be trivial to implement and make things much more
| secure...
|
| If it were truly trivial, this would have been implemented long
| ago. This isn't a pure engineering problem as much as it's a
| "convincing people to do it" problem.
| tjader wrote:
| It is implemented in most of the world outside of the US.
|
| It is scary that the info you need to deposit funds into an
| account in the US also allows you to withdraw funds from it.
| spelunker wrote:
| I mean, credit cards do it with tokens, so at least part of
| the industry moved to something like that already.
| dqv wrote:
| I mean take a page from cryptocurrencies [0] and allow multiple
| wallets. Then add on access control. Payroll is always going to
| want to be able to pull back from the "wallet", but that
| doesn't mean there can't be some access control mechanism that
| says "only payroll can push to or pull from this wallet
| address".
|
| [0]: or whatever thing one wants to say is responsible for
| generating the idea of multiple electronic wallets. I get that
| some people think crypto is dumb. Take your pick on what was
| responsible for this idea.
| lmz wrote:
| As a non American, the idea of a bank account number being a
| kind of secret that is usable to pull money out of the account
| is the most curious thing to me. I guess something like this
| can only exist in a high trust environment.
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